Rental Property 5: 1 bath 1 bath units CHEAP but old, Worth it? ?

Question

I found a really cheap rental property that has 5: 1 bath 1 bath units. It was built in 1940 so it needs work. In a ruff neighborhood, but good for this type of rental. It needs new sub floor and leveling, roof, electrical, siding, windows, fixtures (budget), etc... We estimated at 30kish in repairs, but my husband is a building contractor and we could save a lot of money. Three of the 5 units are rented which causes a new issue, how to renovate the building while occupied? It's taxable value is 68,000 and they are asking 33,000. I was gonna offer 15-20 It rents for $200 a unit now, but after a renovation we could get section 8 at $500 a unit. We'd have to pay cash cause I don't know if they would give a loan for that property. If we bought it cash, could we get a LOC on it to renovate?

Answer 1

.   You are anticipating problems before they happen which means you will be a good landlord.  Apartments are harder to finance than houses.  Paying cash is smart.  You can get a loan after you fix it up.  Try different approaches to collecting rent and see what works best. Get it.

Answer 2

Does 5 mean that number of apartments?  It sounds like it needs more than what you say for if it were new in 1940 than it will expect some hidden improvements.  I would make the offer as low as possible, you can always increase it if needed, but by all means finance it for a higher dollar. Ask the bank for 60 K but tell them to put 40K in escrow.  That will draw interest while you find out how much it will take for your renovation.  When your re-construction is finalized and you are ready to rent pay off the entire loan.  God Bless